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15 August 2006


GaAs epi market grew 40% in 2005; Asia-Pac suppliers 145%

The total semi-insulating (SI) GaAs epitaxial substrate market (merchant and captive) rose by 40% in 2005, from 8511ksi (thousand square inches) in 2004 to 11932ksi, according to Strategy Analytics' latest study,"Markets for SI
GaAs Epitaxial Substrates 2005-2010"
. Merchant demand jumped 44% in 2005, with Kopin, Hitachi Cable and IQE the top three suppliers. Healthy demand, coupled with tight supply, will translate to increased revenues for merchant
suppliers, the study predicts.

While the market share picture at the top has largely remained unchanged over the past few years, the Asia-Pacific vendors established themselves as viable alternatives to North American and Japanese suppliers in 2005 and will continue to threaten the dominant suppliers, Strategy Analytics reckons.

"Year-on-year, the combined output at VPEC and MBE Technology increased 145% in 2005. The two companies accounted for 15% of SI GaAs epitaxial merchant supply," said Asif Anwar, director of the Strategy Analytics' GaAs and
Compound Semiconductor Technologies service. "We expect to see continued growth across the whole industry, and the Asia-Pacific suppliers will want to be at the forefront of this growth in 2006."

"We will see some significant shifts in market share in 2006. In particular, IQE's acquisition of the Emcore GaAs epi business will challenge market leaders Kopin and Hitachi Cable," predicts Stephen Entwistle, vice president of Strategy Analytics' Strategic Technologies Practice. "Also, VPEC and MBE Technology are well positioned to take advantage of ramps at GaAs device foundries in their region, which could see them gain market share in 2006."

In terms of value, the total SI GaAs epitaxial substrate market is forecast to grow at a compound average annual growth rate (CAAGR) of 16% to $487m in 2010, the study concludes.

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